A business law blog published by the business lawyers at AttorneyBritt - Gary L. Britt, CPA, J.D. Commentary and information regarding the laws and regulations applicable to individuals, corporations, partnerships, and limited liability companies (LLCs); as they relate to the myriad of business transactions, contracts, and agreements every business owner, shareholder, member, physician, and/or health care provider must consider.

Tuesday, June 28, 2016

Tax Tips For Students Working This Summer

Many students get summer jobs. It’s a great way to earn extra
spending money or to save for later. Here are some tips for students
with summer jobs:

1. Withholding and Estimated Tax. If you are an employee, your employer normally withholds tax
from your paychecks. If you are self-employed, you may be responsible
for paying taxes directly to the IRS. One way to do that is by making estimated tax payments on set dates during the year. This is essentially how our pay-as-you-go tax system works.

2. New Employees. When you get a new job, you need to fill out a Form W-4,
Employee’s Withholding Allowance Certificate. Employers use this form
to calculate how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.

3. Self-Employment. Money you earn working for others is taxable. Some work you do may count as self-employment.
These can be jobs like baby-sitting or lawn care. Keep good records of
your income and expenses related to your work. You may be able to deduct those costs. A tax deduction generally reduces the taxes you pay.

4. Tip Income. All tip income
is taxable. Keep a daily log to report your tips. You must report $20
or more in cash tips received in any single month to your employer. And
you must report all of your yearly tips on your tax return.

5. Payroll Taxes. You may earn too little from your summer job to owe income tax. But your employer usually must withhold social security and Medicare taxes
from your pay. If you’re self-employed, you may have to pay them
yourself. They count for your coverage under the Social Security system.

6. Newspaper Carriers. Special rules apply to a newspaper carrier
or distributor. If you meet certain conditions, you are self-employed.
If you do not meet those conditions, and are under age 18, you may be
exempt from Social Security and Medicare taxes.

7. ROTC Pay. If you’re in ROTC, active duty pay, such as pay you get for summer advanced camp, is taxable. Other allowances you may receive may not be taxable, see Publication 3 for details.

8. Use IRS Free File. You can prepare and e-file your tax return for free using IRS Free File,
available only on IRS.gov. You may not earn enough money to be required
to file a federal tax return. Even if that is true, you may still want
to file. For example, if your employer withheld income tax from your
pay, you will have to file a return to get a tax refund.